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Tips for downsizing: Costs, benefits, setbacks
As the industry pushes for reforms to help older Australians downsize and unlock housing stock, a top agent has revealed her key advice for retirees thinking of putting their homes on the market.
McGrath Epping partner and agent Betty Ockelander has revealed her top tips for older Australians thinking of selling their homes, following several industry bodies calling for more reform around downsizers.
Property leaders have suggested changes to policy to help older Australians downsize, freeing up homes for millions of buyers, as data shows they hold most of the nation’s spare bedrooms.
Similarly, the Retirement Living Council (RLC) warned that current rules have been penalising retirees who sell to move into villages, cutting them off from key pension and rent assistance benefits.
According to Ockelander, older Australians and retirees in her area are usually either very willing to sell and downsize or unable to stand the thought of moving, preferring to stay where they are.
She said that older Australians should consider the advantages of selling their family home and moving into a smaller property or a retirement village.
“The advantage of retirement villages, they've got a network of people that they can be around and there are functions and there are trips and they can be involved or they don't need to be involved.”
However, Ockelander warned that downsizers may not know the true costs of moving and can at times be susceptible to misinformation from others.
For example, while some retirees would be hesitant to move to a strata property as they don't want to pay levies, the costs may actually be less than they seem.
“I say, well, if you add up what your house insurance is, how much it costs you to do your lawn, do your garden, clean your gutters, do any repairs, each year you're paying more than what the strata levies are,” she said.
“Your building insurance is also included in the strata levies and you don't need to pay that.”
She also said that strata properties tend to offer reduced council and water rates, but retirees often don’t recognise the cost savings, instead focusing on the regular expenses.
“I do a spreadsheet and just show them the differences so they can see that really they're going to be in front if you added up everything you spent on a house in a year.”
In addition, to help with their peace of mind, she advised prospective downsizers to visit Centrelink and clarify what would happen to their benefits if they sold their family home.
“That money part is a big fear that, ‘Will I lose my medical benefits? Will I lose my pension?", Ockelander said.
She said that even if their benefits get cut after downsizing, some senior Australians have the possibility of buying an investment property to receive income.
Ockelander said that retirees must be able to see both sides of the argument of downsizing to make the best possible decision.
Additionally, she advised prospective downsizers to find where they want to live first rather than selling straight away, given that many will have particular preferences for their homes.
“They should know where they want to go first before they just put the house on the market and be left homeless, because that's very stressful at that age.”
“Do they want to go to a unit or a villa or a retirement village? They need to work that out beforehand and they can get terms, they can have a three months settlement on properties to give them time to sell.”
While moving to a smaller house is tempting, she said that many prospective downsizers have been daunted by the idea of packing up their belongings and decluttering their homes, causing them to put off selling their property.
She said that while decluttering is a priority, older Australians can do it in stages, reducing the stress associated with moving.
“It's better to start decluttering and start doing things a couple of years before they intend to do it so that it doesn't become overwhelming to do it all in a rush at the end.”
“It makes them feel better as well, because they've put some thought into where their things are going.”
She said that if they need it, downsizers should seek assistance, whether from family or from agents who can pass on their contacts.
“I help most of my clients by giving them that service and giving them the names of the people I trust to do those things for them because they don't think they're capable of doing it well.”
“They're generally not capable of doing it themselves. And so then everything gets put off because it's just too hard,” she concluded.
The realestate.com.au GemLife Downsizing Australia Report has revealed that 85 per cent of Australians aged 55 and older lived in homes with two or more spare bedrooms.
By comparison, a quarter of Australians aged 25–54 had no spare rooms, and five per cent had fewer rooms than their family size required.
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